Borneo Post Online (05/08/2019) - THE US and Chinese trade representatives met in Shanghai last week but no deal has been reached and next meeting is scheduled in September. President Donald Trump said that China is not purchasing American agricultural products.

After the trade talk, President Trump announced a new 10 per cent tariff to be imposed on US$300 billion Chinese imports by September. China pledged to retaliate. Stocks and crude prices fell.

The US Federal Reserve cuts 25bp in Fed fund rate but chairman Jerome Powell stressed that this is not the beginning of easing regime. Dow markets fell after mid-week as bond yield declined.

Last Wednesday, North Korea fired new ballistic missiles in Asia. Trump administration ended the Reagan-era nuclear missile pact with Russia causing a commotion in the European Union.

US manufacturing index fell to 51.2 in July while construction spending was down 1.3 per cent in June. China’s manufacturing index grew 49.7 in July but below the 50 benchmark. Samsung Electronic says its profit in 2Q seasons fell 56 per cent from a year ago.

Technical forecast

US dollar/Japanese yen began to slide as the dollar receded. This week, we foresee the trend will be resilient at 107.50 in case of fast retracement. The overall range is expected to dive deeper to 105.50. Short positions are better to be planned from the topside retracement.

Euro/US dollar hovered at 1.11. This week, the trend is uncertain and might head in either direction. In our opinion, dividing below 1.105 will initiate a new selling forces in case of a recovery in the dollar. However, rising above 1.115 could lead to the trend rising and reaching 1.14.

British pound/US dollar performance has been weak since Boris Johnson became the UK’s new prime minister. This week, we reckoned the trend might fall until bargain-hunting emerges at 1.20. The overall range is expected to be contained from 1.20 to 1.22.

WTI Crude prices fell and took a dip below US$54 per barrel after US announced new tariffs on Chinese goods. This week, we foresee the potential fall in dollar will only recover gold or WTI. Hence, WTI prices are still uncertain and might fall below US$54 per barrel to test US$51 per barrel level. But a recovery above US$57 per barrel could lead to US$60 per barrel again.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a small range amidst uncertainties. October Futures closed at RM2,061 per metric tonne on Friday. This week, we forecast the range will be contained from RM2,040 to RM2,080 per metric tonne while traders might remain cautious in interpreting the currency movement and regional economic development.

Gold prices have been trading between US$1,400 to US$1,450 per ounce due to uncertainties after the rate cut. Traders reckoned the rate cut may be positive to drive the yellow metal higher but the Fed hinted that this is not the beginning of its easing regime. This week, we forecast the trend will remain unchanged but a rise above US$1450 per ounce could lead to a new bullish sign to US$1,490 per ounce.

Silver prices traded in sideways from US$16 to US$16.50 per ounce. Market sentiments has been mixed as traders adjust their positions. This week, we expect little change in the range movement unless prices extend beyond the aforementioned range.